MHMarkets：February 21, 2024 Economic Highlights

Date: February 21, 2024

Economic Highlights (GMT + 8)

9:30am

AUDWage Price Index q/q

Market Overview

Global Market Recap

On Tuesday, the US Dollar Index fell below the 104 level during the trading session, hitting a more than one-week low. It later rebounded slightly to close down by 0.181% at 104.06. The US Treasury yields retreated, with the benchmark 10-year Treasury yield closing at 4.275%, and the 2-year Treasury yield, most sensitive to Federal Reserve policy rates, closing at 4.613%.

Boosted by the decline in the US dollar and Treasury yields, spot gold rose for the fourth consecutive trading day, briefly touching the 2030 level before closing up by 0.32% at $2024.32 per ounce. Spot silver fluctuated near the $23 level, ending the day up by 0.13% at $23.01 per ounce.

International oil prices began to pull back, with analysts attributing this in part to traders taking profits after strong gains in oil prices earlier in the month. WTI crude oil fell by 1.33% to $77.11 per barrel, while Brent crude oil fell by 1.03% to $82.46 per barrel.

US stocks collectively closed lower, with the Dow down by 0.17%, the Nasdaq down by 0.9%, and the S&P 500 down by 0.6%. Tesla (TSLA.O) dropped by over 3%, while AMD (AMD.O) and NVIDIA both fell by over 4%, and Intel (INTC.O) rose against the trend by 2%. The Nasdaq Golden Dragon China Index fell by 1.3%, with XPeng (XPEV.N) dropping by over 5% and Nio (NIO.N) falling by 3%.

European stocks showed mixed movements, with the German DAX30 down by 0.14%, the UK's FTSE 100 down by 0.12%, and the Euro Stoxx 50 down by 0.06%.

Hong Kong stocks opened higher but ended lower, with the Hang Seng Index opening up by 66 points at 16222 points. It briefly surged on news-driven momentum but then reversed course, dropping by up to 100 points to a low of 16055 points. The index rebounded notably in the afternoon, supported by the 50-day moving average. At the close, the Hang Seng Index was up by 0.57%, the HSI Technology Index was up by 0.35%, with a total turnover of HK$76.9 billion. Publishing and oil and gas stocks performed strongly, pharmaceutical stocks rose against the market, and Chinese brokerage stocks showed strength. Shipping and logistics, electronic components, and automobile stocks led the declines. Individual stocks included WuXi AppTec (02359.HK) up nearly 8%, China Literature Group (00772.HK) up nearly 7%, Xinao Energy (02688.HK) up 5%, Alibaba Health (00241.HK) and CNOOC (00883.HK) both up by over 3%; Shenzhou International (02313.HK) down by over 4%, XPeng Motors (09868.HK) down by over 3%, Sunny Optical Technology (02382.HK) and BYD Co. (01211.HK) down by over 2%.

In the A-share market, stock indices fluctuated in the morning session before edging up slightly in the afternoon. At the close, the Shanghai Composite Index was up by 0.42%, the Shenzhen Component Index was up by 0.04%, and the ChiNext Index was down by 0.01%. In terms of sector performance, the multimodal AI concept soared throughout the day, with many stocks hitting the 20% daily limit; the media sector was strong, with several stocks including Zhongwen Online hitting the daily limit; pharmaceutical stocks rose, with weight loss drugs, CRO, and traditional Chinese medicine leading the gains. Chip stocks rallied in the final trading session, with storage chips leading the way; the banking sector rose in the final session, with Agricultural Bank and Bank of China hitting new historical highs. The shipbuilding sector and the hotel and catering sector saw a pullback. About 3400 stocks rose in the two markets, with a turnover of over 780 billion yuan.

Cryptocurrencies returned to an upward trend, with Bitcoin briefly surpassing $53,000 per coin for the first time since December 2021. Ethereum touched $3,000 during the session, the first time since May 2022.

Market Highlights:

· The market is beginning to focus on the risk of the Fed returning to rate hikes.

· The US Conference Board's Leading Economic Index for January fell more than expected.

· Biden's energy advisor: LNG exports may be suspended for up to 14 months.

· Musk nominated for Nobel Peace Prize.

· Amazon included in the Dow Jones Industrial Average.

· China's 5-year LPR lowered by 25 basis points.

· Shanghai and Shenzhen Stock Exchanges implement trading suspension measures for Ningbo Lingju.

· Quantitative giant Citadel denies liquidating any of its fund products.

Institutional Views:

1. Bank of America (BofA)

According to Bank of America's examination of options market trends, there's a prevailing belief that EUR/USD's downside potential is restricted in the short term, provided that US economic data doesn't consistently exceed forecasts. Nevertheless, external economic uncertainties pose a potential trigger for additional appreciation of the USD.

2. TD

TD's analysis indicates a change in market dynamics, as a rebound and acceleration in global growth challenge the idea of US exceptionalism, impacting currency market strategies. This setting favors growth and risk-sensitive currencies, offering investment prospects in certain currency pairs that reflect the broader global economic outlook.

3. Credit Agricole

Credit Agricole advises caution regarding the USD/JPY, despite its notable gains. The bank highlights that current market dynamics and official rhetoric suggest a limited runway for further appreciation. Credit Agricole emphasizes the importance of monitoring implied volatility and geopolitical developments, as these factors could swiftly alter the attractiveness of USD/JPY positions, especially in the context of potential Japanese intervention.